NEA Loses Rs 1.25b While Importing Electricity

The Nepal Electricity Authority (NEA) suffered a loss of Rs 1.24 billion through import of electricity from India in six months from last August to January. The loss will rise further as additional electricity has been imported since January. The NEA has been importing up to 240 MW from different Indian institutions to limit load-shedding to 12 hours during the dry season.

The NEA has procured electricity from the Power Trading Corporation (PTC) Limited, North Bihar Power Distribution Company Limited, Uttar Pradesh Electricity Board and Uttarakhanda Electricity Board this year. Managing Director of NEA Mukesh Raj Kafle says the NEA has suffered loss while selling electricity to consumers at a lower price than the price at which it imports from India. He claims that per unit cost of electricity rises up to Rs 12.50 including leakages while importing electricity from India. There is a system leakage of 25 percent in the NEA now. The NEA earns Rs 8.05 per unit on an average by selling electricity.

Stating that the rising loss is creating problems even in cash flow, he proposes tariff hike or grant as alternatives. He reveals that the Electricity Tariff Fixation Commission (ETFC) has not hiked tariff despite repeated requests by the NEA. The accumulated loss of NEA has already reached Rs 19 billion and he says it will cross Rs 25 billion by the end of the current fiscal year. The government had written off accumulated debts of NEA worth Rs 27.50 billion a few years ago.

The NEA had imported electricity worth Rs 8.25 billion from India in the fiscal year 2070/71 to reduce load-shedding. Agreement has been reached with PTC to procure electricity at a commercial rate of Rs 7.92(IRs 4.95) per unit. Electricity is being imported from Tanakpur at a little lower rate as per the power exchange agreement between the two countries.

Contribution of imported electricity to total supply in Nepal has reached 23 percent by the last year. Dependence on India even on electricity has increased with Nepal failing to generate enough electricity to meet domestic demands. Indian Prime Minister (PM) Narednra Modi has already announced to double export of electricity to Nepal from India for a certain period to reduce load-shedding. The NEA has already signed agreement with PTC to buy up to 150 MW at a commercial rate for the next 25 years. Additional electricity can be imported from PTC from the next year if the trans-national transmission line is completed within the scheduled time.

Chairman of ETFC Jagat Kumar Bhusal says the Supreme Court, citing the Electricity Tariff Regulation which prohibits review of tariff by more than five percent in a year, has directed to not raise tariff by more than five percent and it can, therefore, not be increased by a greater proportion. He argues that we need seasonal tariffs. The Supreme Court has blocked the ETFC’s decision to raise tariff by 13.7 percent effective from mid-September following a writ petition.